Bharti Airtel and Vodafone Idea have decided not to react to Reliance Jio's recent introduction of new post-paid plans, increasing the likelihood that price rises are imminent in India.
Jio's new plans are specifically designed to lure post-paid subscribers served by other telcos. Customers can port their credit limits to the Jio network along with their numbers. Jio is also bundling subscriptions to popular OTT platforms such as Netflix, Amazon Prime, Jio Cinema and Disney+Hotstar.
While Jio has crossed the 400 million subscriber mark (according to July regulatory data), many of its subscribers are of the prepaid variety, and using Jio as a supplementary service. Jio also has a high number of inactive subscribers, and its average revenue per user (ARPU) was just INR140 ($1.9) per month in the June-ending quarter. Airtel manages INR157 ($2.14).
Jio has clearly struggled to attract higher-spending contract customers, who continue to remain loyal to its rivals. ARPU for this customer segment is INR244 ($3.32), according to government data issued earlier this year. For the prepaid one, it is just INR84 ($1.14).
Yet while both Airtel and Vodafone Idea have a significant number of post-paid subscribers, some analysts have not been surprised by their decision not to respond to Jio's latest tariff move.
"RJio's plans do not threaten the post-paid customer base of BAL [Bharti Airtel] and VIL [Vodafone Idea] due to the sticky nature of customers and similar content offerings," says a report by India Ratings and Research Company.
Notably, both Airtel and Vodafone Idea have offered access to Amazon Prime and Netflix in some of their post-paid plans.
What's more, many of their post-paid subscribers are enterprise customers. For this segment of the market, network performance rather than price is the critical consideration when deciding which network to use.
While Vodafone Idea has lost many subscribers in the last year, its post-paid subscriber base has remained relatively loyal. On top of that, neither it nor Vodafone Idea is in a hurry to cut rates – both companies owe money to the government under India's Adjusted Gross Revenue (AGR) dues.
After years of decline, ARPU may now be on the verge of recovery in India. ICRA, a credit ratings firm, expects it to reach INR220 ($2.90) per month across the industry in the medium-term.
"The tariffs of Jio's post-paid plans are almost double [those] of its existing plans," says its report.
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— Gagandeep Kaur, contributing editor, special to Light Reading